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Globalization is a concept that has expanded over the last decade. However, it is highly likely to decline in the future because of the enlarging campaigns against terrorism, immigration, and climate change. Over the past decade, the principal drivers of globalization have been education, international business, as well as cohesion in many nations across the world (Das, 2011). Many countries are trying to reduce their production capacities to lessen the influence of manufacturing on greenhouse gas emissions. The states that have been pushing globalization by supporting multinational companies have signed international agreements that have the primary purpose of decreasing carbon emissions. Additionally, global trends are indicating that the service industry is expanding higher in the developed countries compared to the developing countries. The developed countries play a significant role in entrenching globalization. The expansion of e-business further reduces the need for multinational businesses to set up base in various countries since some business transactions can be conducted online. As a result, the globalization rates are scheduled to decline over the next decade.
International politics is set to play a significant role in declining globalization over the past five years. Many countries are tightening their immigration policies in the wake of terror threats and the growing refugee crisis. The closing of borders for some national not to enter in some countries, for example, there are stringent laws that technically bars Iranians from getting access into the United States is responsible for the declining levels of globalization in the next half a decade. Some political decisions such as the decision issued by President Trump to withdraw from the Trans-Pacific Partnership is a sign of declining globalization over the next five years.
Joint Venture or having a strategic alliance means that a firm teams up with one or more than one firm in order to reach a greater market share. This is aimed at increasing their firm’s portfolio in the target market as well as taking advantage of the existing processes of the partnering firm. The parties involved usually maintain their identity in the market place in order to advance their global image, while overriding on the other parties platform to increase their sales and market presence. The parties involved usually enters into a partnership agreement to have clearly defined boundaries devoid of the other parties, overstepping their mandate, and some are often for a given timeframe.
Overally, the strategic alliance usually takes this forms: Joint venture where the parties involved are legally independent firms work which closely on a particular project. Another one is the Equity Strategic Alliance whereby the firms involved are engaged on the basis of percentage of a firm’s ownership in terms of equity contribution. The third type of a strategic alliance takes the form of No-equity strategic alliance whereby the parties agree on a common goal for their coming, without involving financial implications and lastly is on the global strategic alliance where the parties involved partner on nation or international platforms that the partner firms enjoys for their business to thrive (Heidtmann & Gesellschaft für Projektmanagement (Germany) 2011). The strategic alliance herein involves that of Apple and with Sony. This was aimed at boosting and taking advantage that exists on strength portrayed between the American and the Japanese technological strengths that the two firms enjoy.
Sony on one hand is at an advantage of merging some of the Apple’s computer software with its newly created field thus making Sony to enjoy some of the high end products. Such a merger has made the two parties to ride on the market gap that existed there before and is having positive impact on the general firm’s profits.
Strategic alliance makes one the parties to streamline their operations thus taking advantage of the market gap, overriding of partners platform to penetrate the target market. Thus, from that engagement, Apple could learn from Sony how it does its operations to have quality music in very compatible means. Maybe a lesser disadvantage that may arise could be on the competition once the contract period terminates due to sharing of platforms.
Globalization refers to a process through which businesses and companies develop expand their operations from the national scale to the international level. Regionalization is a decentralization process in which companies classify a given geographical region into a cohort based on unilateral consumer behaviors. Localization is the process of confining the operations of a business to a given geographic area.
The two reactive responses that firms, why firms wish to become involved with globalization, are technology and politics. Technology spurs innovation (Hitt, Ireland & Hoskisson, 2008). Thus, business growth and politics lead to the formulation of legislation that makes it easy to do and transact business. Market and cost are proactive drivers. Saturation of domestic markets compels companies to go global while cost drivers result from scale economies within the global realm.
Apple is an international company that relies on the quality of the electronics that they offer to their market and the protection of data of their clients as an entry strategy to their markets. The major advantage of formulating a strategic alliance is that business gains from shared knowledge and increased market and brand presence. The major pitfall is that the integrated strategy that is used by the firm may be bought by a rival firm, thus, making the company competitively weak.
An actual joint venture that has occurred over the past decade is. A non-equity strategic alliance results when two companies pursue the same goal together while remaining independent while the equity strategic alliance results when two firms merge, thus, losing their autonomy and independence (Hitt, Hoskisson & Ireland, 2017).
Das, T. K. (2011). Strategic alliances in a globalizing world. Charlotte, N.C: Information Age Pub.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2008). Strategic management: Competitiveness and globalization. Mason, Ohio: South-Western.
Heidtmann, D., & Gesellschaft für Projektmanagement (Germany). (2011). International strategic alliances and cultural diversity: German companies getting involved in Iran, India and China. Hamburg: Diplomica Verlag Gmbh.
Hitt, M. A., Hoskisson, R. E., & Ireland, R. D. (2017). Strategic management: Competitiveness & globalization.
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